@sdelsad/commodity-desk-daily 1.0.63 → 1.0.65

package/covered.md

@@ -21,3 +21,4 @@ Running log. Read before writing a new episode: avoid repeating material, and on
 - **Ep 17** (Tue) — *Options: The Fence, the Vol Crush and the Wing You Sold*: Options as hedgers use them: the fence/collar on 30,000 t physical corn (1,181,040 bu, 236 lots) at 536.75 buying the Dec 520 put at 18c and selling the Dec 560 call at 17c for 1c net = 11,810 dollars, effective floor 519 and ceiling 559; three WASDE scenarios - 495 gives -209,635 floor, 585 gives +262,781 cap, unchanged gives the vol crush; the key argument that a fence is near vega-flat while a bought put is long event volatility, which is the real reason desks fence rather than buy puts; grain skew inverted versus equities because supply fails upward so calls are the dear wing, and skew as a read on who is frightened (consumers and shorts, not farmers); the cost of the free wing - Dec corn at 620 hands back 720,435 dollars, paid out as variation margin daily while the physical gain stays unrealised (ep 3 callback); TRADER/BROKER fence-quoting dialogue where the net premium is quoted in cents and never a volatility. Pulse: Labor Day closure so Friday 4 Sep settles stand - Dec corn 536.75 -4 about 13c below a three-year high, Nov beans 1309.75 -6.5 near a 2.5-year high, Dec Chi wheat 734.00 -20.25, Dec KC 802.25 -13.25, Matif Dec 246.25 -1.0 percent after a 259.25 contract high on Wednesday; WASDE Friday 11 Sep with the trade looking for a 2-3 bu/ac corn yield cut from 180.7; GEO escalation of the Black Sea thread - US envoys in Moscow and Kyiv over the weekend while Russia struck Izmail and Chornomorsk grain facilities and Ukraine struck refineries at Ryazan, Perm and Tatarstan, Ukrainian shipments to 2 Sep 433,000 t up 80 percent w/w but still a fraction of normal, transmission read as the probability of capacity returning rather than capacity itself changing
 - **Ep 18** (Thu) — *EFP, Delivery and the Squeeze*: Ep 18 - EFP, Delivery and the Squeeze: exchange for physical as the ordinary plumbing of a basis trade, with AA and EFS as the softs and swap variants; worked example 25,000 t SRW at Toledo = 918,600 bu = 184 lots, merchant short 184 Dec against a miller long 184 Dec, crossed at 747.00 with the physical at Dec plus 25, so both futures legs extinguish without touching the screen; the three properties - no market impact, simultaneity, and a negotiated futures leg where striking it 7c lower moves 64,400 dollars of P&L between the books while the wheat costs the same; legging risk quantified as a 4c drift on 184 lots = 36,800 against a 35c basis margin of 321,510 = 11.4 percent; delivery as a shipping certificate rather than grain, a load-out obligation carrying a daily storage meter, so convergence is a cost rather than a courtesy; squeeze arithmetic with 1,200 lots open at first notice against 620 lots of registered certificates, 580 shorts with nothing to deliver, three exits priced at deliver 22c, roll 34c, buy back 41c, so the inverse is capped by the cost of making grain deliverable less the days you do not have, and 41c on 580 lots = 1,189,000; Armajaro's 240,100 t cocoa delivery of July 2010 at about 7 percent of a year's world crop and the exit problem that makes a corner half a trade; the opposite failure of 2008 Chicago wheat non-convergence and the 2010 variable storage rate with its 80 percent and 50 percent thresholds, 0.10c/day steps, roughly 5c/month floor and no ceiling; the depth point that full carry contains an exchange-set term, so percent of full carry is a feedback loop rather than a thermometer (ep 16 callback at 46 percent). Pulse: Wed 9 Sep settles Dec corn 527.75 -5.75, Nov beans 1309.50 -6.75, Dec Chi wheat 728.75 -18.25, Oct meal 345.10 +1.80, Oct oil 70.08 -14 pts; spec liquidation out of a reported record corn net long of about 431,000 contracts into Friday's WASDE, with private yield estimates straddling USDA's 180.7 in both directions (Pro Farmer 173.2, Reuters poll 178.2, StoneX production 16.207 bn bu or 194 m above USDA); corn 56 percent good to excellent against 69 a year ago and harvest 5 percent; bean flash sales 340 kt China plus 100 kt unknown; GEO escalation - Latvia's proposed 300 percent tariff on Russian grain aimed squarely at the Baltic rail detour (about 5 Mt of booking requests against roughly 7 Mt/yr of terminal capacity, replacing southern ports that moved 46.3 Mt last season), peace-talk headlines deflating the war premium on the same day drones struck Novorossiysk, Ukraine's Greater Odesa rail arrivals -94.9 percent to 68,500 t against Danube nearly tripling to 248,800 t, Danube freight to Italy and Spain +20-25 USD/t in a week, and Pakistan tendering 750 kt after Saudi Arabia cancelled 535 kt
 - **Ep 19** (Fri) — *Basis Deep Dive and Origination*: Ep 19 - Basis Deep Dive and Origination: the four ingredients of basis - freight, farmer selling, end demand and space - and none of them a view on price; the three-bucket decomposition of a hedged merchant's P&L with flat price structurally zero; worked example 1,000,000 bu of central Illinois corn bought at Dec minus 35 with Dec at 533.75 for 498.75, hedged 200 lots, rolled Dec into Mar at 14c of carry, sold at Mar plus 5, so basis 40 plus calendar 14 equals 54c gross or 540,000 dollars, less 16c storage and 8.31c interest for 29.69c net or 296,900 dollars; the carry covered 14 of an 18.23c three-month cost, about 77 percent of full carry, so the basis must earn the rest (ep 16 callback at 46 percent); the farmer contract menu as a table of risk transfers - cash, forward cash, basis contract, hedge-to-arrive, deferred price, minimum price - and what each leaves on the elevator's book; the 1996 HTA inversion and why an open leg is a position; FARMER/ORIGINATOR basis-contract dialogue with a February pricing deadline; why farm selling clusters on round numbers, cash-flow dates and a full bin, and why that clustering lands entirely on the posted bid rather than the board; basis push as paying for delivery speed; relationships as infrastructure - the unprinted quality spread and credit spread that make two neighbours' bids four cents apart and both correct. Pulse: Thu 10 Sep settles Dec corn 533.75 +6, Nov beans 1332.25 +22.75, Dec Chi wheat 741.25 +12.5, Dec KC 818.75 +12.5, Dec spring 762.50 +14.5, Oct meal 350.60 +5.50, Oct oil 71.41 +133 pts, Matif Dec 245.25 +0.50; the bid came from energy with Oct WTI +6.00 to 102.06 on Persian Gulf fighting, transmission named as the oil share, freight and bunkers, and war-risk premium quoted per voyage; China took 272,000 t beans plus 206,500 t unknown; Gulf CIF basis unchanged at 60-66 over Dec corn and 100-102 over Nov beans while flat price rallied, used as the bridge into the lesson; USDA barge freight index 221.70 to 250.44 in one week with truck, rail and ocean all higher; WASDE Friday 11 Sep with the trade looking for 178.1 corn yield against 180.7, production 15,768 m bu and ending stocks 1,533 m bu, beans 52.5 and 289 m bu; Black Sea read - Russian wheat eased to about 210 USD/t with September loadings about 1 Mt behind the 4.6 Mt of a year ago despite strikes on Novorossiysk, Nika-Tera and Makhachkala inside 24 hours, damaged capacity already in the price and no buyer yet short of tonnes.
+- **Ep 20** (Mon) — *Destination Markets, Tenders and the Winner's Curse*: Ep 20 - Destination Markets, Tenders and the Winner's Curse: how importers buy through tenders and how an export desk prices a bid backwards from the destination as a netback; worked example 60,000 t milling wheat CFR North Africa = 2,204,640 bu = 441 lots, FOB Gulf replacement Dec 725.25 plus 92 = 817.25c = 300.29 USD/t, plus freight 31.50, financing 25 days at 6 percent 1.37, outturn 0.15 percent 0.50, bonds and agent 0.35 for a delivered cost of 334.01, awarded at 334.50 for a margin of 0.49 USD/t or 29,400 dollars or 1.33 c/bu; the winner's curse quantified - ten bidders with 2.00 USD/t estimate dispersion means the winning bid sits 1.54 standard deviations low, 3.08 USD/t or 184,656 dollars below true cost, six times the margin, so the two answers are bid shading and bidding only from facts rather than forecasts; tender validity as a free option handed to the buyer for six hours after bids close; TRADER/AGENT tender dialogue where the trader quotes a bid he expects to lose and prices the optional origin; the destination store-or-sell - November CFR 336.00 against January 342.00 pays 6.00 USD/t to wait while silo at 2.20/t/month for two months is 4.40 and financing at 7.5 percent is 4.20 for a total 8.60, so storing loses 2.60 USD/t or 156,000 dollars and the break-even borrowing rate is about 2.9 percent; the depth that a state importer manages days of cover on a subsidy and FX allocation calendar rather than a P&L, so the 2.60 is an insurance premium, and the two consequences for the seller - clustered tender demand moving basis and freight together in the week the bid already fixed them, and importing markets showing less carry than exporting markets because storage sits where capital is cheapest. Pulse: Friday 11 Sep settles after the September WASDE - Dec corn 530.25 -3.5, Nov beans 1296.50 -35.75, Dec Chi wheat 725.25 -16, Dec KC 798.50 -20.25, Dec MIAX spring 745.00 -17.5, Oct meal 346.80 -3.80, Oct oil 69.19 -222 pts; the WASDE print itself as the escalation of the thread built in eps 18 and 19 - corn yield cut to 178.5 from 180.7 but 0.4 above the trade's 178.1, production 15.800 bn bu, carryout 1.567 bn against 1.533 expected, stocks-to-use 9.7 percent, beans yield 52.8 production 4.535 bn carryout 310 m against 290 expected, US wheat carryout 717 m in line, world wheat stocks 276.29 Mmt against 273.0 expected, so all six headline numbers above the trade guess and a cut smaller than the one you are positioned for is a bearish cut; corn export sales 1.929 Mmt to 3 Sep and Mexico a further 264,000 t, wheat commitments 322 m bu -31 percent y/y; GEO escalation of the Black Sea thread to flow substitution - Russian September loadings 1.6-2.0 Mt against 4.9 Mt a year ago while Asian buyers took at least 500,000 t of Australian and Argentine wheat instead, transmission named as differential repricing rather than flat price, evidenced by world wheat stocks revised 3.3 Mmt higher in the same week, supply not missing but misplaced and moving it costing freight

package/ep20.md

@@ -0,0 +1,270 @@
+# Market pulse
+
+**The USDA cut the corn yield by more than two bushels and the corn market closed lower. Every one of the six headline numbers landed above what the trade had guessed, and a cut smaller than the one you are positioned for is a bearish cut.**
+
+| Contract | Last | Change |
+|---|---|---|
+| Dec corn (CBOT) | 530.25 c/bu | −3½ |
+| Nov soybeans (CBOT) | 1,296.50 c/bu | −35¾ |
+| Dec Chicago SRW (CBOT) | 725.25 c/bu | −16 |
+| Dec Kansas City HRW | 798.50 c/bu | −20¼ |
+| Dec MIAX spring wheat | 745.00 c/bu | −17½ |
+| Oct soybean meal (CBOT) | $346.80/short ton | −3.80 |
+| Oct soybean oil (CBOT) | 69.19 c/lb | −222 pts |
+
+Friday's September supply and demand report put the US corn yield at 178.5 bu/ac, down from 180.7 in August. Production came out at 15.800 bn bu and carryout at 1.567 bn bu, which tightens stocks-to-use to 9.7 percent. That is a real cut. It was also 0.4 bu/ac above the trade's average guess of 178.1, and the carryout was 34 m bu above the 1.533 bn the market had priced. Soybeans went the other way on a friendly-looking print: yield 52.8, production 4.535 bn bu, carryout 310 m bu against estimates near 290. November beans lost 35¾ cents, most of it profit-taking off the top of a long rally rather than anything in the report.
+
+The wheat numbers barely moved at home — 717 m bu of US carryout, in line — but world wheat ending stocks came in at 276.29 Mmt against 273.0 expected, an extra 3.3 Mmt that nobody was looking for. Weekly corn export sales were 1.929 Mmt for the week to 3 September, and Mexico booked a further 264,000 t of new crop. Wheat export commitments stand at 322 m bu, down 31 percent on the year.
+
+```chart
+{"type":"line","mode":"index","unit":"index, 4 September = 100","title":"The friendly print that sold off",
+ "caption":"Soybeans gave back Thursday's twenty-two-cent rally and more. The corn yield came down and corn still finished the week lower than it started it, because the cut was smaller than the one the market had already bought.",
+ "source":"CBOT settlements. 7 September was Labor Day and 8 September is not shown.",
+ "x":["4 Sep","9 Sep","10 Sep","11 Sep"],
+ "series":[{"name":"Dec corn","values":[536.75,527.75,533.75,530.25]},
+           {"name":"Nov beans","values":[1309.75,1309.50,1332.25,1296.50]},
+           {"name":"Dec Chi wheat","values":[734.00,728.75,741.25,725.25]}]}
+```
+
+## The geopolitical read
+
+Russian September loadings are running at 1.6 to 2.0 Mt against 4.9 Mt in the same month a year ago. That is a two-thirds reduction in the world's largest wheat exporter, in the middle of its export season, and the board is going down.
+
+The wire that explains it is not price. It is flow substitution. Asian buyers have taken at least 500,000 t of Australian and Argentine wheat in place of Black Sea tonnes they could not get comfortable with. The wheat still moves, it just moves from somewhere else, on a longer voyage, at a different basis. What that does is lift the differential at the substitute origin and leave the futures board more or less where it was.
+
+This is the mechanism that most people under-price, because it is invisible on a screen. A blocked origin does not create a shortage as long as another origin has the tonnes and the vessels. It creates a re-pricing of *differentials* — up at the origin everybody switched to, down at the one they left. The proof arrived in the same report: world wheat ending stocks were revised 3.3 Mmt *higher* than the trade expected, in the week that Russian loadings ran two-thirds below normal. The supply is not missing. It is in the wrong place, and moving it costs freight rather than flat price.
+
+Which is a destination-market decision, taken by a buyer in an import office with a tender document in front of them. That is today's subject.
+
+# Key takeaways
+
+- A tender price is not a price you quote. It is a price you calculate backwards from the buyer's port, subtracting every cost between their discharge berth and your origin, until what is left is either a margin or a reason not to bid.
+- The destination sets the number; the origin only tells you whether you can live with it. Two houses looking at the same tender arrive at different bids because they own different origins, not because they disagree about the wheat.
+- A tender bid is a firm offer for a fixed validity period. During those hours the buyer holds a free option on your price, and you hold the risk of every market that moves inside the window.
+- The winner of a tender is not the most efficient bidder. It is the bidder whose cost estimate was most wrong in the helpful direction. With ten bidders and ordinary estimating error, the winner is systematically below true cost — which is why a disciplined desk expects to lose most of the tenders it enters.
+- An importer's store-or-sell arithmetic is the same arithmetic as a merchant's, with one term added and one term removed. The added term is security of supply. The removed term is the obligation to make money on the trade.
+- Model a state importer as a profit maximiser and you will get their timing wrong. They buy on a calendar set by consumption, foreign exchange allocation and political risk, and they will pay to be early.
+
+# Vocabulary
+
+| Term | What it means |
+|---|---|
+| **Tender** | A formal, published invitation to offer, in which an importer states a quantity, a specification, a delivery period and a set of terms, and invites sellers to submit sealed price offers by a stated deadline |
+| **Tender validity** | The period after the bid deadline during which a submitted offer remains firm and the buyer may accept it, typically a few hours, during which the seller carries the market risk and the buyer holds the choice |
+| **Bid bond** | A bank guarantee lodged with the offer, forfeited if a bidder wins and then refuses to sign, which is what makes a tender bid a commitment rather than an indication |
+| **Performance bond** | A larger guarantee posted by the winner against actually shipping the goods to the contracted terms, usually a low single-digit percentage of the contract value and carrying a real financing cost |
+| **Optional origin** | A tender term allowing the seller to supply from any of several named origins, which is worth money to the seller because it is a portfolio of alternatives rather than a single commitment |
+| **Netback** | The value of a cargo at an upstream point, obtained by taking a downstream price and subtracting every cost in between, the standard way an export desk turns a destination price into an origin bid |
+| **Import premium** | The amount a destination market pays above the exporting market's replacement value, which is what draws cargoes towards that destination rather than another |
+| **Winner's curse** | The result that in a competitive auction for an item of uncertain common value, the winning bid is drawn from the low tail of the bidders' estimates, so the winner systematically overpays unless every bidder shades the bid downward |
+| **Bid shading** | Deliberately bidding away from your own best estimate of value, by roughly the size of the expected winner's curse, in order to make winning informative rather than merely expensive |
+| **Days of cover** | The number of days of domestic consumption an importing country holds in stock, the operational number a state buyer manages rather than a price |
+| **Cash-and-carry** | Buying the physical, selling the deferred contract and storing the goods to collect the spread, which pays only when the carry in the market exceeds storage plus finance |
+
+# Quiz
+
+**Q1.** A North African importer tenders for 60,000 t of milling wheat, CFR, shipment 1 to 15 November, optional origin. You intend to serve it out of the US Gulf. December Chicago wheat settled at 725.25 c/bu and your FOB Gulf replacement cost is December plus 92 cents. A 60,000 t Panamax from the Gulf to the Mediterranean costs $31.50/t. You finance the cargo for 25 days at 6.0 percent on the CFR value, you carry an outturn and weight allowance of 0.15 percent of the CFR value, and the bid bond, performance bond and local agent's fee together cost $0.35/t. The tender is awarded to you at $334.50/t CFR. Work out your margin, in dollars per tonne and on the whole cargo.
+
+**Q2.** The same importer is offered November shipment at $336.00/t CFR and January shipment at $342.00/t CFR. Their own silo costs $2.20/t per month and their working capital costs 7.5 percent a year. On the numbers alone, which shipment should they buy?
+
+**Q3.** An elevator buys 400,000 bu of corn at December minus 28, rolls the hedge from December into March and collects 12 cents of carry on the roll, then sells the corn at March plus 8. How many cents per bushel does the position earn gross, before storage and interest?
+
+**Q4.** A merchant long physical corn has a fence on: long the December 520 put, short the December 560 call, one cent of net premium paid. December settles at 604. What is the effective price realised on the hedged bushels?
+
+**Q5.** Conversion drill. Brazil's soybean area for the coming season is put at 48.5 million hectares. How many million acres is that?
+
+---
+---
+---
+
+# SOLUTIONS (spoilers)
+
+**A1.** Everything in this problem is a subtraction, and the discipline is to do them in one currency and one unit. Convert the origin cost into the destination's units first, then walk backwards.
+
+*Size.* 60,000 t × 36.744 = 2,204,640 bushels. At 5,000 bushels a lot, that is 440.93, so a full hedge is 441 lots. One cent a bushel on this cargo is about $22,000.
+
+*The origin cost, in the destination's units.* Your FOB Gulf replacement is 725.25 + 92 = 817.25 c/bu. A bushel of wheat is 60 lb and a tonne is 36.744 bushels, so multiply: $8.1725 × 36.744 = $300.29/t FOB Gulf.
+
+*The walk backwards from the award.*
+
+| Step | $/t |
+|---|---|
+| CFR award | 334.50 |
+| Less freight, Gulf to Mediterranean | −31.50 |
+| Less financing, 25 days at 6.0% | −1.37 |
+| Less outturn and weight allowance, 0.15% | −0.50 |
+| Less bid bond, performance bond and agent | −0.35 |
+| Less FOB Gulf replacement | −300.29 |
+| **Margin** | **+0.49** |
+
+The financing line is $334.50 × 0.06 × 25 ÷ 365 = $1.37. The outturn line is 0.15 percent of $334.50, which is $0.50.
+
+*The result.* $0.49/t on 60,000 t is $29,400. In the units the origin desk actually speaks, $0.49 ÷ 0.36744 = 1.33 c/bu — about a third of a cent more than the tick the market trades in.
+
+*The trap.* The question asks for a margin and the margin is a real, positive number, so the natural conclusion is that this was a good bid. It was not, and the reason has nothing to do with the arithmetic above.
+
+Suppose ten houses bid this tender. Each estimates the same true delivered cost, and each estimate is honest and unbiased, but each is built on slightly different freight ideas, slightly different views of what the FOB basis will be when they have to cover, and slightly different bond costs. Say those estimates are scattered with a standard deviation of $2.00/t around the truth — which is modest for a November shipment priced in September.
+
+The tender does not go to the average bidder. It goes to the lowest. For ten independent draws, the lowest sits about 1.54 standard deviations below the mean, so the winning bid is on average 1.54 × $2.00 = $3.08/t below the true cost of the business. On 60,000 t that is $184,656.
+
+Set that against the margin: $3.08 of expected estimating error against $0.49 of expected margin. The error is more than six times the reward. Winning this tender at $334.50 is not evidence that you were efficient. It is evidence that your freight number was the most optimistic one in the room.
+
+*What to do about it.* Two things, and only two. Shade the bid — add roughly the expected curse to your own estimate before you submit, accept that you will now lose most tenders, and treat that as the system working rather than failing. Or bid only where your edge is a fact rather than an estimate: tonnes you already own at a known basis, freight you have already fixed, an origin option nobody else can offer. A fact does not have a standard deviation, and it is the only thing that makes a competitive tender worth entering.
+
+**A2.** Buy January.
+
+Waiting is offered to them at $6.00/t: January at $342.00 against November at $336.00, over two months. Doing it themselves costs more.
+
+| Cost of buying November and storing to January | $/t |
+|---|---|
+| Silo, $2.20/t per month for two months | 4.40 |
+| Financing, $336.00 × 7.5% × 2 ÷ 12 | 4.20 |
+| **Total** | **8.60** |
+
+It costs $8.60 to store and the curve pays $6.00 to wait. Buying November and holding loses $2.60/t, which is $156,000 on a 60,000 t cargo.
+
+The break-even is worth knowing: with the silo cost fixed at $4.40, financing would have to fall to $1.60 over two months for storage to pay, which is a borrowing rate of about 2.9 percent. Working capital in most importing countries is nowhere near that, which is why destination buyers are structurally reluctant carriers of stock and why importing markets usually trade with less carry than the exporting market that supplies them.
+
+And yet they will often buy November anyway — see the written edition. The $2.60/t is then not a mistake. It is the price of not running out.
+
+**A3.** 48 cents.
+
+Two components, kept separate.
+
+| Component | c/bu |
+|---|---|
+| Basis, bought at 28 under and sold at 8 over | 36 |
+| Calendar, carry collected on the December to March roll | 12 |
+| **Gross** | **48** |
+
+The basis half is 28 + 8 = 36 cents: buying below the board and selling above it both earn, and the two add. The calendar half is the 12 cents of carry the roll paid a short hedger. Neither number depends on where corn went in the meantime, which is the point of the hedge. On 400,000 bu, 48 cents is $192,000 gross, out of which storage and interest still have to come.
+
+**A4.** 559 c/bu.
+
+The physical is sold into a 604 market, so the cash leg realises 604. The short 560 call is 44 cents in the money and has to be paid: 604 − 560 = 44. The net premium paid for the structure was 1 cent.
+
+604 − 44 − 1 = **559**.
+
+That is the effective ceiling the fence created, and it does not move however far December goes. Settling at 585 or at 700 gives the same 559 on the hedged bushels. Selling the upper wing is what paid for the floor, and this is what it costs when the wing is the one that pays out.
+
+**A5.** About 120 million acres.
+
+One hectare is 2.47 acres. The fast method is to multiply by 2.5 and then shave one percent: 48.5 × 2.5 = 121.25, less 1 percent is 1.21, giving **120.0 million acres**. The exact figure is 48.5 × 2.47 = 119.8 million acres.
+
+# The written edition
+
+## The price is set at the other end
+
+A merchant's instinct is to start from what they own. They know their farm gate, they know their elevation, they know the board, and they build a number upward until it becomes an offer.
+
+A tender does not work that way. The importer publishes a quantity, a specification, a delivery window and a set of terms, and the only question in front of every bidder is what number to write in the box. That number is set at the destination and worked backwards, and the origin only enters at the end, as a test of whether the answer is survivable.
+
+This is the **netback**, and it is the most used piece of arithmetic on an export desk. Take the destination price. Subtract the freight. Subtract the cost of money between paying at load and collecting at discharge. Subtract the weight you will lose between the two ports. Subtract the guarantees. What is left is the value of the cargo at your loading berth, and that is the number you compare against what it actually costs you to put wheat on that berth.
+
+Two houses looking at the same tender will arrive at different bids. Not because they disagree about wheat — they read the same balance sheet and the same freight list. They differ because one of them already owns 40,000 t in a Gulf elevator at last month's basis and the other has to go and buy it on Monday. The destination sets the price. The origin decides who can live with it.
+
+## Building the bid backwards
+
+Take the tender in question one, and build the number the way an export desk builds it, from the outside in.
+
+| Line | $/t | Where it comes from |
+|---|---|---|
+| FOB Gulf replacement | 300.29 | December 725.25 plus 92 basis, times 36.744 |
+| Freight, Panamax to the Med | 31.50 | Owner's indication, November laycan |
+| Financing, 25 days at 6.0% | 1.37 | Payment at load, collection at discharge |
+| Outturn and weight allowance | 0.50 | 0.15% of the CFR value |
+| Bonds and agent | 0.35 | Bid bond, performance bond, local fee |
+| **Cost, CFR** | **334.01** | |
+| Target margin | 2.00 | |
+| **Bid** | **336.01** | |
+
+```chart
+{"type":"waterfall","unit":"USD/t","title":"A tender award, walked backwards",
+ "caption":"Winning at 334.50 leaves 49 cents a tonne, or $29,400 on a Panamax. That is less than a quarter of the error in the freight number the bid was built on.",
+ "source":"Worked example, episode 20, built on December Chicago wheat at 725.25 c/bu, 11 September 2026",
+ "steps":[{"label":"CFR award","value":334.50,"kind":"base"},
+          {"label":"Freight","value":-31.50},
+          {"label":"Financing","value":-1.37},
+          {"label":"Outturn","value":-0.50},
+          {"label":"Bonds, fees","value":-0.35},
+          {"label":"FOB Gulf","value":-300.29},
+          {"label":"Margin","kind":"total"}]}
+```
+
+Three lines in that table deserve more attention than they usually get.
+
+**Freight is the biggest number after the wheat itself, and it is the least certain.** $31.50/t on 60,000 t is $1.89 m. A two-dollar error in the freight idea is $120,000, which is four times the margin the whole trade is being done for. Desks that bid tenders without a firm owner's indication in hand are not trading wheat, they are trading dry bulk with a wheat-shaped position attached.
+
+**The financing line is small and it is not optional.** Twenty-five days between paying for the cargo at the load port and collecting from the buyer at discharge, at six percent, is $1.37/t. It looks like rounding. It is three times the margin in the worked answer.
+
+**The bonds are a cost of entry, not a cost of goods.** A bid bond is lodged with the offer and forfeited if you win and walk away. A performance bond is posted by the winner against delivering. Both tie up credit lines that could be doing something else, and both are paid whether or not the trade ever earns anything.
+
+## Validity, and the option you hand over
+
+A tender bid is firm for a stated period after the deadline. Bids close at eleven, validity runs to five: for those six hours the buyer may accept your offer, and you may not withdraw it.
+
+That is an option, and the buyer did not pay for it. If the board rallies fifteen cents inside the window, the buyer accepts and you are short the market at a price set before the rally. If it breaks fifteen cents, the buyer declines, re-tenders next week, and you have nothing. The value of that option grows with volatility and with the length of the window, and it is one of the quiet reasons that tender business carries a wider margin requirement than negotiated business — which brings us to how it actually sounds when the clock is running.
+
+TRADER: Where are we on the North African?
+
+AGENT: Bids close eleven, validity to five.
+
+TRADER: Put me three thirty-seven eighty, sixty thousand, optional origin.
+
+AGENT: Three thirty-seven eighty is not winning it. Last one went four under that.
+
+TRADER: Then I do not win it.
+
+Two things happened there. The trader quoted a bid he expected to lose, and he was right to. And the optional origin was stated as part of the price, because it is: the right to fill from the Gulf or the Black Sea or France, decided later, is worth real money and the bid reflects it.
+
+## Why winning is the problem
+
+Here is the part that separates a tender desk from a spreadsheet.
+
+Ten houses bid. Each has an honest estimate of what the business costs, and the estimates differ because the inputs differ — freight ideas, a view on where the FOB basis will be in a fortnight, the cost of a bond on a particular balance sheet. Say those estimates scatter with a standard deviation of $2.00/t around the true cost.
+
+The award goes to the lowest bid, not the average one. The expected lowest of ten independent draws lies about 1.54 standard deviations below the mean. So the winner has, on average, bid $3.08/t below the true cost of doing the business — $184,656 on a Panamax, before a single tonne moves.
+
+This is the **winner's curse**, and the uncomfortable part is that it does not require anybody to be careless. Every bidder can be competent, honest and unbiased, and the auction will still hand the cargo to whoever happened to be most optimistic that day. Being cheapest is not the same as being right. It is a statement about the tail of a distribution.
+
+There are exactly two answers.
+
+The first is **bid shading**: add roughly the expected curse to your own estimate before submitting, and accept the consequence, which is that you will lose most of what you bid on. A desk that wins sixty percent of its tenders is not good at tenders. It is the one supplying the curse to everybody else.
+
+The second is to bid only where the edge is a **fact rather than an estimate**. Tonnes already bought at a known basis. Freight already fixed. A silo at the load port that nobody else has. An origin option the specification allows and only you can deliver. Facts have no standard deviation, which is why the houses that do well in tender business are the ones whose advantage sits in the asset base rather than in the forecast.
+
+## The buyer is not maximising P&L
+
+Turn the table around and look at the same cargo from the import office, because the seller who misreads this misprices the tender.
+
+The importer in question two faces a two-month decision. November CFR is $336.00 and January is $342.00. The market is offering them $6.00/t to wait.
+
+```chart
+{"type":"bar","unit":"USD/t over two months","title":"What waiting costs the importer",
+ "caption":"Storing a November cargo into January costs $8.60 a tonne and the curve pays $6.00. The $2.60 gap, $156,000 on a Panamax, is the price of not running out.",
+ "source":"Worked example, episode 20",
+ "x":["Silo tariff","Financing","Total cost","Market carry"],
+ "series":[{"name":"Two-month carry","values":[4.40,4.20,8.60,6.00]}]}
+```
+
+Doing it themselves costs $8.60: $4.40 of silo tariff and $4.20 of interest on $336 at seven and a half percent. Buying November and holding it loses $2.60/t against simply buying January, which is $156,000 on the cargo. On the numbers, the answer is obvious.
+
+They buy November anyway, and often they are right to.
+
+A state or para-state importer is not running a trading book. They are running **days of cover** — the number of days of national consumption sitting in silo. Bread is frequently subsidised and the subsidy has a budget line. Hard currency for imports is released on an allocation calendar that is set by a central bank, not by a forward curve. And the cost of being wrong is not symmetric: a cargo bought two months early costs $156,000, and a mill that runs out of wheat costs something that does not appear on any P&L at all.
+
+So the $2.60/t is not a mistake. It is an insurance premium, knowingly paid, on an exposure the seller does not carry and often does not see.
+
+### What that does to the seller
+
+Two consequences, and both are money.
+
+The first is timing. Model the buyer as a profit maximiser and you will predict they wait for January. They will not, and when the tender lands in November you will be covering FOB and fixing freight in the same week as everybody else who made the same mistake. Clustered demand is the reason tender weeks move basis and freight together — the two costs in the netback that the bid already fixed.
+
+The second is the shape of the curve itself. Because destination buyers are expensive, reluctant carriers of stock, importing markets tend to show less carry than the exporting markets that supply them. Storage sits where it is cheapest, which is usually at origin. That is not a market failure. It is the market paying whoever holds capital most cheaply to hold the grain, and it is why the merchant at the loading end and the importer at the discharge end can both look at the same $6.00 of carry and correctly reach opposite conclusions.
+
+## The thing to carry away
+
+A tender is not a place to express a view. It is a place where an arithmetic error becomes a contract, and where the reward for being right is a few tens of thousands of dollars while the penalty for being optimistic is a few hundred thousand.
+
+The desks that make money out of destination business are not the ones with the best view on wheat. They are the ones who bid from facts, who expect to lose, and who understand that the buyer on the other side is solving a different problem entirely.

package/ep20.script.txt

@@ -0,0 +1,92 @@
+The most dangerous thing that can happen to you in a tender is that you win it. ||| 0.6
+That is not a joke about paperwork. It is a statement about statistics. ||| 0.5
+This is Soft Commodity Trading, episode 20. Destination markets, tenders, and why winning is the problem. ||| 0.8
+First, the market. ||| 0.5
+The U S D A cut the American corn yield on Friday, and corn closed lower. ||| 0.45
+The yield came down from one hundred eighty point seven bushels an acre to one hundred seventy eight point five. Carryout, one point five six seven billion bushels, and stocks to use down to nine point seven percent. ||| 0.5
+That is a genuine cut. ||| 0.45
+It was also four tenths of a bushel above what the trade had guessed, and the carryout landed thirty four million bushels above what the market had already bought. ||| 0.5
+A cut smaller than the one you are positioned for is a bearish cut. ||| 0.6
+December corn settled five thirty and a quarter, down three and a half cents. ||| 0.4
+Soybeans took it much harder. November beans lost thirty five and three quarter cents to twelve ninety six and a half, on a report that was, if anything, friendly. That was profit taking off the top of a long rally. ||| 0.5
+Chicago wheat down sixteen cents to seven twenty five and a quarter. Kansas City down twenty and a quarter. ||| 0.6
+Now the Black Sea, because one number in that report does not fit the headlines. ||| 0.45
+Russian loadings this month are running between one point six and two million tonnes. A year ago the same month did four point nine. ||| 0.45
+Two thirds of the world's largest wheat exporter, missing, in the middle of its own season. And world wheat ending stocks were revised three point three million tonnes higher than expected. ||| 0.6
+Those two facts are not in conflict. The wire between them is flow substitution. ||| 0.45
+Asian buyers have taken at least half a million tonnes of Australian and Argentine wheat, in place of Black Sea cargoes they could not get comfortable with. ||| 0.45
+The wheat still moves. It moves from somewhere else, on a longer voyage, at a different differential. ||| 0.45
+A blocked origin does not create a shortage while another origin has the tonnes and the ships. It reprices differentials. Up where everybody switched to, down where they left. ||| 0.5
+The supply is not missing. It is in the wrong place, and moving it costs freight, not flat price. ||| 0.6
+That decision — which origin, which month — gets taken by a buyer sitting in an import office with a tender document in front of them. ||| 0.5
+So. A merchant's instinct is to price upward. You know your farm gate, you know your elevation, you know the board, and you build until it becomes an offer. ||| 0.45
+A tender does not work like that. Every bidder faces one question. What number goes in the box. ||| 0.5
+And that number is calculated backwards, from the buyer's port. ||| 0.6
+Take the destination price. Subtract the freight. Subtract the cost of money between paying at load and collecting at discharge. Subtract the weight you lose between the two ports. Subtract the guarantees. ||| 0.5
+What is left is the value of that cargo sitting on your loading berth. ||| 0.4
+That is the netback, and it is the most used piece of arithmetic on an export desk. ||| 0.7
+Let me put numbers on it. ||| 0.4
+Sixty thousand tonnes of milling wheat, C F R, November shipment, to a North African port. ||| 0.45
+Sixty thousand tonnes of wheat is two million two hundred and four thousand bushels. Four hundred and forty one Chicago lots. One cent a bushel on that cargo is about twenty two thousand dollars. ||| 0.55
+Your wheat. December Chicago at seven twenty five and a quarter, F O B Gulf at ninety two cents over. That is three hundred dollars and twenty nine cents a tonne. ||| 0.55
+Freight, Gulf to the Mediterranean, thirty one dollars fifty. ||| 0.4
+Financing, twenty five days at six percent, one dollar thirty seven. ||| 0.4
+Outturn and weight allowance, fifty cents. ||| 0.4
+Bid bond, performance bond and the local agent, thirty five cents. ||| 0.5
+Add it up. The business costs you three hundred and thirty four dollars and one cent a tonne, delivered. ||| 0.6
+You win the tender at three hundred and thirty four dollars fifty. ||| 0.5
+Margin, forty nine cents a tonne. Twenty nine thousand four hundred dollars on the whole cargo. ||| 0.6
+Positive. Thin, but positive. ||| 0.5
+Now here is the problem with that. ||| 0.6
+Ten houses bid that tender. Every one is competent and honest, and every one has a slightly different number, because they have different freight ideas and different views on where the F O B basis will be when they cover. ||| 0.5
+Say those estimates scatter with a standard deviation of two dollars a tonne around the truth. That is modest for a November cargo priced in September. ||| 0.55
+The award does not go to the average bidder. It goes to the lowest one, and the expected lowest of ten independent draws sits about one and a half standard deviations below the mean. ||| 0.5
+So the winner has, on average, bid three dollars and eight cents a tonne below what the business actually costs. ||| 0.5
+A hundred and eighty four thousand dollars, before a single grain moves. ||| 0.7
+Set that against your margin. Three dollars eight of expected error, against forty nine cents of expected reward. ||| 0.5
+The error is six times the prize. ||| 0.7
+That is the winner's curse, and the uncomfortable part is that it needs nobody to be careless. Everybody can be competent and unbiased, and the auction still hands the cargo to whoever was most optimistic that morning. ||| 0.5
+Being cheapest is not the same as being right. It is a statement about the tail of a distribution. ||| 0.7
+There are two answers to this, and only two. ||| 0.45
+The first is to shade the bid. Add the expected curse to your own estimate before you submit it, and accept that you now lose most of what you bid on. That is the system working, not failing. ||| 0.5
+A desk that wins sixty percent of its tenders is not good at tenders. It is the desk supplying the curse to everybody else. ||| 0.65
+The second answer is to bid only where your edge is a fact rather than a forecast. ||| 0.45
+Tonnes you already own at a known basis. Freight you have already fixed. A silo at the load port that nobody else has. ||| 0.45
+A fact does not have a standard deviation. ||| 0.7
+All of which is why a good tender desk often sounds like a desk that is trying not to trade. ||| 0.5
+TRADER: Where are we on the North African? ||| 0.25
+AGENT: Bids close eleven, validity to five. ||| 0.25
+TRADER: Put me three thirty seven eighty, sixty thousand, optional origin. ||| 0.25
+AGENT: Three thirty seven eighty is not winning it. Last one went four under that. ||| 0.25
+TRADER: Then I do not win it. ||| 0.65
+Two things happened there. He quoted a bid he expected to lose, deliberately. ||| 0.45
+And validity to five means his offer stays firm for six hours after bids close. For those six hours the buyer holds a free option on his price. ||| 0.45
+If the board rallies, they accept. If it breaks, they decline and re-tender next week. Nobody paid him for that option. ||| 0.5
+It is one reason tender margins get quoted wider than negotiated ones. ||| 0.7
+Now turn the table around, because the seller who misreads the buyer misprices the tender. ||| 0.55
+Same importer. November shipment is offered at three hundred and thirty six dollars a tonne, January at three hundred and forty two. The market is paying them six dollars a tonne to wait. ||| 0.55
+What does waiting cost them to do it themselves? ||| 0.4
+Silo, two dollars twenty a tonne a month, for two months. Four dollars forty. ||| 0.4
+Interest on three hundred and thirty six dollars at seven and a half percent, for two months. Four dollars twenty. ||| 0.45
+Eight dollars sixty to store. Six dollars to wait. ||| 0.55
+Buying November and holding it loses two dollars sixty a tonne. A hundred and fifty six thousand dollars on the cargo. ||| 0.6
+On the numbers the answer is obvious. Buy January. ||| 0.55
+They buy November anyway. And they are often right to. ||| 0.7
+A state importer is not running a trading book. They are running days of cover. How many days of national consumption are sitting in silo. ||| 0.5
+Bread is often subsidised, and the subsidy has a budget line. Hard currency gets released on a calendar set by a central bank, not by a forward curve. ||| 0.5
+And the cost of being wrong is not symmetric. ||| 0.5
+Buying two months early costs a hundred and fifty six thousand dollars. A mill that runs out of wheat costs something that never appears on a P and L at all. ||| 0.6
+So that two dollars sixty is not a mistake. It is an insurance premium, knowingly paid, on an exposure the seller does not carry and mostly cannot see. ||| 0.7
+Two consequences for you, and both of them are money. ||| 0.45
+The first is timing. Model that buyer as a profit maximiser and you will predict they wait for January. They will not. ||| 0.45
+When the tender lands in November, you are covering F O B and fixing freight in the same week as everybody else who made the same mistake. ||| 0.5
+Clustered demand is why tender weeks move basis and freight together. Those are the two costs your bid has already fixed. ||| 0.65
+The second is the shape of the curve. Because destination buyers are expensive, reluctant holders of stock, importing markets tend to show less carry than the exporting markets that feed them. ||| 0.5
+Storage sits where it is cheapest, and that is usually at origin. That is the market paying whoever holds capital most cheaply to hold the grain. ||| 0.7
+Three things to keep. ||| 0.45
+A tender price is calculated backwards from the buyer's port, never forwards from your farm gate. Your origin only tells you whether you can live with the answer. ||| 0.55
+The winner of a tender is not the most efficient bidder. It is the one whose estimate was most wrong in the helpful direction. Expect to lose, and bid from facts. ||| 0.55
+And the buyer across the table is not solving your problem. They are buying days of cover on a budget calendar, and they will pay to be early. ||| 0.7
+Next time, the book and P and L attribution. Physical long, paper short, by month and by location, and how errors surface in it. ||| 0.5
+The quiz is in the e-mail and on the page. Question one is the full tender netback, with the winner's curse sitting inside it. ||| 0.6
+This is Soft Commodity Trading. ||| 0.5

package/feed.xml

@@ -18,6 +18,18 @@
       <title>Soft Commodity Trading</title>
       <link>https://storage.googleapis.com/podcast-audio-2647223968/index.html</link>
     </image>
+    <item>
+      <title>Ep 20 — Destination Markets, Tenders and the Winner's Curse</title>
+      <link>https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep20.html</link>
+      <description><![CDATA[<p>How large importers actually buy, and how an export desk prices a tender bid backwards from the buyer's port. Then why winning the tender is the most reliable way to lose money on it.</p><p><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep20.html">Read this episode, with the charts, the glossary and the quiz &rarr;</a></p>]]></description>
+      <itunes:summary>How large importers actually buy, and how an export desk prices a tender bid backwards from the buyer's port. Then why winning the tender is the most reliable way to lose money on it.
+
+Read this episode: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep20.html</itunes:summary>
+      <enclosure url="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep20.mp3" length="0" type="audio/mpeg"/>
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+      <pubDate>Mon, 14 Sep 2026 05:00:00 GMT</pubDate>
+      <itunes:duration>0</itunes:duration>
+    </item>
     <item>
       <title>Ep 19 — Basis Deep Dive and Origination</title>
       <link>https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep19.html</link>

package/glossary.md

@@ -23,6 +23,8 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **basis push** — a temporary improvement in the posted bid used to pull grain out of farm storage when a buyer needs tonnes quickly  _(ep 19)_
 - **bear spread** — a calendar position short the nearer month and long the deferred, which profits when the carry widens toward full carry  _(ep 16)_
 - **bid** — the price a buyer will pay  _(ep 1)_
+- **bid bond** — a bank guarantee lodged with a tender offer and forfeited if the bidder wins and then refuses to sign, which is what makes a tender bid a commitment rather than an indication  _(ep 20)_
+- **bid shading** — deliberately bidding away from your own best estimate of value, by roughly the size of the expected winner's curse, so that winning a tender becomes informative rather than merely expensive  _(ep 20)_
 - **bill of lading** — receipt, contract of carriage and document of title in one, whoever holds it owns the cargo  _(ep 4)_
 - **biomass-based diesel** — the RFS category covering biodiesel and renewable diesel made from fats and vegetable oils  _(ep 9)_
 - **blend wall** — the physical or warranty limit on how much conventional biodiesel an engine or fuel system will tolerate  _(ep 9)_
@@ -41,6 +43,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **carry market (contango)** — a curve with later months above nearer ones, the market pays for storage  _(ep 3)_
 - **carry-in** — stocks left over from the previous season, the starting point of a balance sheet  _(ep 2)_
 - **carryout** — ending stocks, the desk's one-word name for what is left at the end of the marketing year  _(ep 7)_
+- **cash-and-carry** — buying the physical, selling a deferred futures contract and storing the goods to collect the spread, which pays only when the carry in the market exceeds storage plus finance  _(ep 20)_
 - **Center-South** — the Brazilian sugarcane region running from Sao Paulo through Minas Gerais and Goias, about 90 percent of the national crop and the swing supplier of the world sugar market  _(ep 14)_
 - **cents per bushel** — Chicago grain quoting unit, 4.39 dollars per bushel is spoken four thirty-nine  _(ep 1)_
 - **certified stock** — coffee sampled, graded and stamped as deliverable against the futures contract and held in an exchange-licensed warehouse, the deliverable float rather than world inventory  _(ep 12)_
@@ -64,6 +67,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **crush capacity** — installed daily processing volume, a physical constraint that cannot be expanded inside a marketing year  _(ep 8)_
 - **cwt** — hundredweight, 100 lb, the quoting unit for US rice and cattle  _(ep 1)_
 - **cwt (hundredweight)** — 100 lb, the quoting unit for US rice  _(ep 1)_
+- **days of cover** — the number of days of domestic consumption an importing country holds in stock, the operational number a state buyer manages rather than a price  _(ep 20)_
 - **days to liquidate** — a position divided by honest daily volume, the sizing measure that replaces a notional limit in a thin market  _(ep 15)_
 - **deadweight (dwt)** — the total weight a vessel can carry including cargo, fuel, water, stores and crew, so always more than the cargo she can load  _(ep 10)_
 - **Dec over** — spread quoting convention that names the expensive leg, December fifteen over means December is 15 cents above the other month  _(ep 3)_
@@ -138,6 +142,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **hydrous ethanol** — roughly 95 percent ethanol sold directly at the pump for flex-fuel cars in Brazil, taking 1.6913 kg of ATR per litre  _(ep 14)_
 - **ICUMSA** — the colour scale for refined sugar, lower being whiter, with the London No. 5 contract requiring 45 ICUMSA or better  _(ep 14)_
 - **implied disappearance** — use derived by subtraction rather than by measurement, the technique that produces the residual lines of a balance sheet  _(ep 7)_
+- **import premium** — the amount a destination market pays above the exporting market's replacement value, which is what draws cargoes towards that destination rather than another  _(ep 20)_
 - **inclusion rate** — the share of a single ingredient in a feed ration, capped by nutrition and by anti-nutritional factors  _(ep 6)_
 - **Incoterms** — the standard three-letter trade terms that allocate cost and risk between buyer and seller  _(ep 4)_
 - **indication** — a guide price that is not firm  _(ep 1)_
@@ -173,6 +178,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **NASS** — USDA's National Agricultural Statistics Service, the body running the surveys behind the published numbers  _(ep 7)_
 - **natural process** — coffee dried with the fruit still attached, giving a sweeter, heavier and more variable cup  _(ep 12)_
 - **net length** — a fund category's long positions less its short positions, the number that says how much of a rally is positioning  _(ep 13)_
+- **netback** — the value of a cargo at an upstream point, obtained by taking a downstream price and subtracting every cost in between, the standard way an export desk turns a destination price into an origin bid  _(ep 20)_
 - **new crop** — the marketing year about to begin, priced by the contract months that follow the coming harvest  _(ep 7)_
 - **No. 11** — the ICE raw cane sugar futures contract, 112,000 lb quoted in US cents per pound FOB at origin, and the world price of raw sugar  _(ep 14)_
 - **No. 5** — the ICE London white sugar futures contract, 50 tonnes quoted in US dollars per tonne delivered, and the world price of refined sugar  _(ep 14)_
@@ -188,6 +194,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **olein and stearin** — the liquid and solid fractions palm separates into when refined, sold into cooking oil and into fats respectively  _(ep 9)_
 - **on-call purchase** — cotton bought by a merchant from a grower with the futures leg left for the seller to fix later, which makes it latent futures selling  _(ep 15)_
 - **on-call sale** — cotton sold by a merchant to a mill at an agreed differential with the futures leg left for the buyer to fix later, which makes it latent futures buying  _(ep 15)_
+- **optional origin** — a tender term allowing the seller to supply from any of several named origins, worth money to the seller because it is a portfolio of alternatives rather than a single commitment  _(ep 20)_
 - **origination** — the business of buying physical crop from farmers, co-ops and country elevators, together with the network of people and facilities that makes it possible  _(ep 19)_
 - **outright** — a contract agreed at a flat price rather than as a differential, with no fixation to come  _(ep 13)_
 - **P7 and P8** — Baltic Panamax route codes for US Gulf to Qingdao and Santos to Qingdao, the two assessments that set the soybean origin arb  _(ep 10)_
@@ -196,6 +203,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **part cargo** — loading a vessel below capacity because the berth, river or canal cannot take her full draft  _(ep 10)_
 - **pass-fail specification** — a contract term that cannot be met on average, such as contamination, infestation or an unapproved genetic event, where blending increases the affected tonnage instead of diluting it  _(ep 11)_
 - **percent of full carry** — a calendar spread expressed as a fraction of the interest and storage cost of holding the grain to the later month, the standard way a desk reads how badly a market wants storage  _(ep 16)_
+- **performance bond** — a guarantee posted by the winner of a tender against actually shipping to the contracted terms, usually a low single-digit percentage of contract value and carrying a real financing cost  _(ep 20)_
 - **physical (cash)** — real cargoes under contract with specs and load windows, as opposed to paper  _(ep 2)_
 - **plant crush** — what a physical plant actually earns, the board crush adjusted for bean, meal and oil basis and net of conversion cost  _(ep 8)_
 - **planted acres** — area sown, the number that moves on farmer decisions and USDA area surveys  _(ep 6)_
@@ -256,6 +264,8 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **sugar mix** — the share of a mill's recoverable sugars turned into sugar rather than ethanol, bounded above by the plant's crystallisation capacity  _(ep 14)_
 - **Supramax** — a dry bulk vessel of roughly 50,000 to 60,000 dwt, normally carrying its own cranes, working minor bulks and shorter legs  _(ep 10)_
 - **temporary storage** — ground piles, bunkers and bags used when permanent capacity is full, cheap per bushel to build and expensive per bushel in spoilage and rehandling  _(ep 11)_
+- **tender** — a formal published invitation to offer in which an importer states a quantity, specification, delivery period and terms, and invites sellers to submit sealed price offers by a stated deadline  _(ep 20)_
+- **tender validity** — the period after the bid deadline during which a submitted offer stays firm and the buyer may accept it, usually a few hours, during which the seller carries the market risk and the buyer holds the choice  _(ep 20)_
 - **terminal elevator** — large storage at a port, river or rail hub whose business is blending, load-out speed and access rather than farm origination  _(ep 11)_
 - **test weight** — the density measure telling a miller how much flour comes out of a tonne  _(ep 5)_
 - **thin market** — a market in which the price obtainable depends materially on the size being traded, whatever a single lot is worth in notional terms  _(ep 15)_
@@ -286,6 +296,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **whisper number** — the expectation the market is actually trading into a report, which can sit away from the published trade average  _(ep 7)_
 - **white premium** — the London white sugar price less the New York raw sugar price converted to the same unit, which is what the market pays for the act of refining  _(ep 14)_
 - **wing** — an out-of-the-money strike away from where the market is trading, the part of the curve a hedger buys or sells rather than the at-the-money  _(ep 17)_
+- **winner's curse** — the result that in a competitive auction for an item of uncertain common value the winning bid is drawn from the low tail of the bidders' estimates, so the winner systematically overpays unless every bidder shades the bid downward  _(ep 20)_
 - **work** — leave an order resting with a broker  _(ep 1)_
 - **work an order** — leave an order resting at your price and wait  _(ep 1)_
 - **workable** — the quoted price is negotiable  _(ep 1)_

package/package.json

@@ -1,7 +1,7 @@
 {
   "name": "@sdelsad/commodity-desk-daily",
-  "version": "1.0.63",
-  "description": "Soft Commodity Trading - Ep 19: Basis Deep Dive and Origination",
+  "version": "1.0.65",
+  "description": "Soft Commodity Trading - Ep 20: Destination Markets, Tenders and the Winner's Curse",
   "license": "CC-BY-4.0",
   "keywords": [
     "podcast",